Brown v Sweeney
[2022] NZHC 1553
•1 July 2022
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV 2018-404-002663
[2022] NZHC 1553
UNDER the Property Law Act 2007 IN THE MATTER
of an application on notice for orders of sale of properties pursuant to s 339 of the Property Law Act 2007
BETWEEN
DAVID JOHN BROWN
First Plaintiff
AND
TEDDY TRUSTEES LIMITED
Second Plaintiff
AND
DANA MAUREEN ANNE SWEENEY
Defendant
Hearing: 2 June 2022 Appearances:
D W Grove for the Plaintiffs
P J Stevenson for the Defendant
Judgment:
1 July 2022
JUDGMENT OF TAHANA J
[Summary Judgment - application for orders of sale of properties]
This judgment was delivered by me on 1 July 2022 at 12noon Pursuant to Rule 11.5 of the High Court Rules
…………………………
Registrar/Deputy Registrar
Solicitors/Counsel:
Vodanovich Law Ltd, Auckland D Grove, Auckland
Sellar Bone & Partners, Auckland P J Stevenson, Barrister, Auckland
BROWN v SWEENEY [application for orders of sale of properties] [2022] NZHC 1553 [1 July 2022]
Introduction
[1] This proceeding has a long history. The first plaintiff, Mr Brown is the father of the defendant, Ms Sweeney. On 30 November 2018, the plaintiffs (Mr Brown and Teddy Trustees Ltd) filed a claim pursuant to s 339 of the Property Law Act 2007 (the Act) seeking sale of properties that had been jointly purchased and co-owned with Ms Sweeney. This is an application for summary judgment seeking sale of the final property at 28A Sefton Ave, Grey Lynn (28A Sefton).
[2] Mr Brown says Ms Sweeney has agreed to 28A Sefton being sold by auction, which should now proceed. He seeks an interim distribution of funds received from sale of the other properties.
[3] Ms Sweeney opposes the application and says the Court should direct Mr Brown to purchase her share of 28A Sefton based on a valuation she has provided in support of her opposition. Since 2000, Ms Sweeney has lived, and continues to live, at 28A Sefton.
[4] I need to be satisfied that Ms Sweeney has no defence to the claims. The issues to be determined are:
(a)Should 28A Sefton be sold by auction or should Mr Brown be required to purchase Ms Sweeney’s share?
(b)If 28A Sefton is to be sold by auction, should Ms Sweeney be required to vacate 28A Sefton now and sign documentation to enable the sale?
(c)Should there be an interim distribution of funds held in trust from the sale of the other four properties and if so, in what proportions?
Background
[5] Given the claim that there is an agreement for sale by auction, I set out the background in full.
[6] In October 2020, the Court allocated dates for a judicial settlement conference (JSC) on 12 March 2021 and a three-day trial commencing on 23 August 2021.
[7]The outcome of the JSC was recorded in a minute dated 12 March 2021:1
The parties attended a judicial settlement conference today. They agreed in principle the key elements of a settlement. The settlement involves the sale of the five remaining properties at issue and an accounting exercise to reconcile the payments they have each made in relation to the five properties (and one further property already sold) and the ultimate share of the sale proceeds each party will receive.
The parties will prepare and file a consent memorandum recording the terms of the settlement and requesting the Court to appoint an expert accountant to conduct the reconciliation exercise described.
[8] The parties then communicated about what had been discussed and agreed at the JSC so that consent orders could be prepared.
[9] There appears to have been correspondence between the parties on 12 and 16 March 2021 that has not been provided to the Court. In any event, Ms Sweeney’s counsel wrote to Mr Brown’s counsel on 19 March 2021 stating, among other things, that:
6.It is not the case that there was overall agreement at the time that the JSC was adjourned. What was agreed was
(a)the five remaining properties would be sold by auction;
(b)Ms Sweeney’s home would be sold after the sale by auction of the other four properties;
(c)Ms Sweeney could bid on her home (and your clients wouldn’t)
(d)Barfoots would market the sale of the Sefton Ave properties;
…
…
Paras 1 (c) – (f) The documents as discovered in this proceeding show that my client has agreed through her solicitors to the sale of the properties since 2014. At the JSC she agreed to sale by auction. There was no agreement on the issue of any reserve, or other details
1 Brown v Sweeney HC Auckland CIV-2018-404-2663, 12 March 2021 (Minute of Associate Judge Gardiner) at [1]–[2].
associated with the sale terms. These matters were not discussed. Barfoots and Ray White were agreed to at the JSC. It was not proposed at the JSC that your clients could bid on the other properties, the only property where the question of who could or would bid was discussed was 28A, which is my client’s home and has been since it was purchased in 2000. The timing of the auction for 28A was expressly discussed at the JSC and it was agreed that auction would take place after the sale of the other properties and when Ms Sweeney had a clear understanding of her overall financial position and whether she could realistically bid to purchase 28A. There was no timeframe proposed for the auction of 28A. She does not agree to 28 days after the auction of the other properties, as the purpose of the time difference is to enable her to review the total of monies received from the sale of the other properties so she can decide whether she is able to bid on 28A.
[10] Counsel for Mr Brown responded by letter dated 23 March 2021 stating in relation to 28A Sefton that:
In relation to the clause that my clients would have an option to purchase 28A Sefton Avenue if your client does not settle that purchase, that clause was added solely so as to avoid the further cost that would be incurred by undertaking a second auction. Again, I simply cannot understand why your client could logically have any objection to that course of action.
Can you please take your client’s urgent instructions in relation to the above matters, as if your client agrees, I will be able to amend the draft documents you have sent me with a view to reaching a global settlement whereby hopefully, the Court will not need to be involved in due course.
[11] On 24 March 2021, the parties requested that the matter be adjourned to the Duty Judge list on 14 April 2021.
[12] By 14 April 2021, the parties had still not agreed consent orders. Mr Grove sought a two-week adjournment. A memorandum for Ms Sweeney was filed setting out Ms Sweeney’s position arising from the JSC which included appointment of the expert and in relation to 28A Sefton stated:
Sale of properties
14. The defendant has lived at 28A Sefton Ave since it was purchased by the first plaintiff and the defendant as tenants in common in equal shares in or about 21 March 200[0].
…
17. The defendant agrees to orders being made that:
…
(c)28A Sefton Ave is sold by auction by Barfoot & Thompson who will undertake the marketing of that property, with that auction to take place after the earliest of (i) agreement to the distribution of net sale proceeds of the Four Properties is concluded between the parties following the report of the Court Expert or (in the absence of agreement) (ii) following the delivery of a judgment in this proceeding after the hearing which is currently set down for three days commencing on 23 – 25 August 2021.
(d)All parties may bid at the auctions for the Four Properties.
(e)The defendant may bid at the auction for 28A Sefton Ave and the plaintiffs will not bid at the auction for 28A Sefton Ave and will provide the defendant with a personal undertaking that they will take all steps to ensure that no one associated with them will bid at the auction for that property.
(f)The sale proceeds for the Four Properties and 28A Sefton are to be applied as a first priority to the costs of sale and any charges over the relevant property.
[13] By minute dated 14 April 2021, the Court noted the lack of progress and referred the matter back to the Associate Judge who conducted the JSC. The matter was listed in the Chambers list for 7 May 2021.2
[14] On 7 May 2021 a further memorandum of counsel for Ms Sweeney was filed noting that a final consensus had not proved possible and proposed orders:
16. The defendant proposes orders that:
…
(c)28A Sefton Ave is sold by auction by Barfoot & Thompson who will undertake the marketing of that property, with that auction to take place after the earliest of (i) agreement to the distribution of net sale proceeds of the Four Properties is concluded between the parties following the report of the Court Expert or (in the absence of agreement) (ii) following the delivery of a judgment in this proceeding after the hearing which is currently set down for three days commencing on 23 – 25 August 2021.
(d)All parties may bid at the auctions for the Four Properties.
(e)The defendant may bid at the auction for 28A Sefton Ave and the plaintiffs will not bid at the auction for 28A Sefton Ave and will provide the defendant with a personal undertaking that they will take all steps to ensure that no one associated with them will bid at the auction for that property.
2 Brown v Sweeney HC Auckland CIV-2018-404-2663, 14 April 2021 (Minute of Venning J).
(f)The sale proceeds for the Four Properties and 28A Sefton Ave are to be applied as a first priority to the costs of sale and any charges over the relevant property.
[15] On 11 May 2021 the Court encouraged the parties to reach agreement and directed them to file a joint memorandum updating the Court by 21 May 2021.
[16] On 21 May 2021, the parties filed a consent memorandum regarding agreed issues and a trial timetable. The parties by consent sought orders for sale of four of the properties. In relation to 28A Sefton, the consent memorandum states:
In these circumstances, the key issues for determination at trial will be:
(a)The timing of the sale of 28A Sefton [Avenue] (noting all parties are agreed that the property is to be sold by auction).
(b)Determining the formula pursuant to which the sale proceeds from the six properties will be distributed.
(c)A claim by the plaintiffs in relation to rent received/should have been received in relation to 28A and 26B Sefton Avenue (noting that there is no dispute that the first plaintiff is entitled to rent for 26B Sefton Avenue pursuant to the Property Sharing Agreement dated 26 March 2003).
[17] The joint memorandum also set out a proposed timetable to enable the trial set down for August 2021 to proceed.
[18] On 26 May 2021, orders were made by consent for the sale of four of the properties by way of public auction and appointment of an expert to prepare a report in relation to contributions and proceeds from the properties. The minute also noted the issues for trial as set out at [16] above.3
[19] On 10 June 2021, an amended statement of claim was filed seeking orders that 28A Sefton be sold “as soon as practical” by public auction and for Ms Sweeney to provide immediate vacant possession to enable marketing and sale. Mr Brown also claimed fair occupation rent from Ms Sweeney.
3 Brown v Sweeney HC Auckland CIV-2018-404-2663, 26 May 2021 (Minute of Associate Judge Gardiner).
[20] In response, Ms Sweeney filed a statement of defence and counterclaim dated 18 June 2021 stating:
49.In relation to paragraph 51 the defendant says that she has agreed to the sale of the property at 28A Sefton Avenue by auction by Barfoot & Thompson who will undertake the marketing of that property, on the basis that that auction is to take place after the earliest of (i) agreement to the distribution of net sale proceeds of the other four properties … is concluded following the report of the Court Expert or (in the absence of agreement) (ii) following the delivery of a judgment in this proceeding after the hearing which is currently set down for … 23 – 25 August 2021 and says further that she proposed an order to that effect in the memorandum filed in this proceeding on her behalf dated 7 May 2021 (at paragraph 16(c)) ... and says further:
…
(b)The defendant has lived in the property at 28A Sefton Avenue since it was purchased in 2000 and it was purchased from the first plaintiff and Bernard Mitchell with the purpose of providing a family home for her to live in;
(c)The property at 28A Sefton Avenue was not purchased for the first plaintiff to occupy and at no material time has the first plaintiff proposed or requested that he live at the property either with the defendant or to the exclusion of the defendant;
(d)In the absence of agreement as to the purchase of the property by her entered into directly between the defendant and the first plaintiff, on the auction of the property for sale, the defendant wishes to bid, as a purchaser, to buy the property on the basis that she is an owner of the property as a tenant in common in equal shares;
50. …
(g)The defendant has communicated her agreement to the sale of the properties to the plaintiffs, as well as her agreement to purchase the first plaintiff’s share of the property at 28A Sefton Ave;
(h)The defendant can only purchase the first plaintiff’s share of the property at 28A Sefton Ave after the other properties have been sold as without access to her share of the sale proceeds of the other properties she cannot afford to purchase the first plaintiff’s share of the property at 28A Sefton Ave.
[21] On 9 July 2021 counsel for Mr Brown wrote to counsel for Ms Sweeney on an open basis proposing that the parties agree Mr Brown’s basis for accounting for the sales proceeds. If that was agreed, then Mr Brown would agree not to pursue a claim
for rental for 28A Sefton and would agree that the auction would take place after the other properties were sold.
[22]By letter dated 15 July 2021, counsel for Ms Sweeney responded:
Ms Sweeney agrees to the proposal for settlement on the basis that:
….
(e) 28A is marketed for sale (noting your proposals regarding negotiation in good faith) after all of the other properties have sold and on the basis that your clients (or interests associated with them) do not bid at any auction for the sale of the property.
If this proposal is accepted, the Court Expert would need to complete the report, and distribution of the net sale process would be undertaken pursuant to that report.
[23] Counsel for Mr Brown responded by letter dated 26 July 2021 noting Ms Sweeney’s agreement to how distribution was to be made and then setting out outstanding issues. Those issues did not include the issue of whether the plaintiffs could bid at auction.
[24] Counsel for Ms Sweeney appears to have written to counsel for Mr Brown on 3 August 2021 however, this letter has not been provided to the Court. The response dated 4 August 2021, from counsel for Mr Brown notes the urgency in resolving issues to avoid a trial and stating, among other things, that:
… Please urgently confirm that this accurately records the matters resolved and the matters outstanding. Thereafter I will prepare a settlement agreement, further joint instructions to the expert and a memorandum to the Court setting out issues to be determined and how they should be determined.
Matters agreed
…
b)The plaintiffs will not pursue a claim for rental in relation to 28A Sefton Avenue.
c)The plaintiffs will negotiate in good faith regarding the sale of 28A Sefton Avenue, and with a view to reaching the goals sought by your client, namely that the sale takes place after the other properties have been sold so as to allow her to bid at the auction of this property.
…
f)My clients will pay the sale/marketing costs for the sale of all properties but your client’s 50% share will be repaid by way of taking them into account from the net sale proceeds received.
g)The costs award made by His Honour Justice Lang will be credited to my clients.
…
Outstanding issues
…
6.I note that your client requires agreement that in relation to 28A Sefton Avenue my clients, or entities associated with them, will not bid at the auction. That is not agreed. It was suggested at the judicial settlement conference, however, that was on the basis that a global settlement was reached then. A global settlement was not reached and therefore this offer is off the table. Please note however that my client has no present intention on bidding at the auction.
[25] Counsel for Mr Brown filed a memorandum of counsel dated 9 August 2021 which attached correspondence between the parties “that has further narrowed the issues for determination.” The memorandum identified the outstanding disputes which included, in relation to 28A Sefton, the timing of the sale. In Mr Brown’s view, there was no need for a trial so long as a forum is available to resolve the outstanding disputes.
[26] Counsel for Ms Sweeney filed a memorandum of counsel dated 11 August 2021. That memorandum:
(a)referred to the 26 May 2021 minute which set out the agreed issues including “[t]he timing of the sale of 28A Sefton [Ave] (noting all parties are agreed that the property is sold by auction)”;
(b)referred to the additional issue raised by Ms Sweeney’s counterclaim in respect of financial transactions recorded in a book kept by Ms Sweeney and Mr Brown;
(c)indicated that from Ms Sweeney’s perspective, the agreement claimed by the plaintiffs in their memorandum of 9 August 2021 was not consistent with the correspondence;
(d)agreed that the expert needed to consider additional issues including the defendant’s counterclaim; and
(e)indicated that before confirming there was no need for the three-day trial set down to commence on 23 August 2021, counsel needed to confer on the issues to be addressed in the expert report.
[27] The matter was listed in the Duty Judge list on 12 August 2021. The minute dated 13 August 20214 records that counsel agreed that issues had been narrowed substantially, and that they were working towards a settlement which they had some confidence could be achieved. Both agreed more was required of the expert and he would not be in a position to proceed at the hearing scheduled for 23 August 2021. By consent the three-day fixture was vacated and the parties were directed to provide an updating memorandum by 17 August 2021.
[28] Between August and December 2021, the parties continued to update the Court on the progress of the expert report noting that an updated report was being prepared. In a joint updating memorandum dated 17 September 2021, the parties requested a further six-week adjournment and noted:
2.The parties have further conferred and reached agreement, with regard to all of the properties which are the subject of this litigation, that the personal financial contributions of the first plaintiff and the defendant will be given the same status, and on the basis of the terms of a March 2003 property sharing agreement signed by those parties in respect of one of the properties, at 26B Sefton Street.
…
6.There is one further property at 28A Sefton Ave, and the defendant wishes to purchase the first plaintiff’s share in that property, but that will depend (in part) on the sale of the other properties.
Outstanding issues:
7.The further outstanding issues in this litigation are:
a)The costs of these proceedings;
b)The costs of the expert report;
4 Brown v Sweeney HC Auckland CIV-2018-404-2263 (Minute of Robinson J).
c)The first plaintiff’s claim in relation to legal costs paid for by him for the instruction of a criminal barrister for the defendant.
[29] On 22 November 2021, counsel for Mr Brown wrote to counsel for Ms Sweeney requesting confirmation to instruct the agent to set the auction date for the sale of 28A Sefton.
[30] In December 2021, documents were provided to Ms Sweeney to sign to enable 28A Sefton to be marketed and sold. Ms Sweeney did not sign those documents.
[31] By joint memorandum dated 29 October 2021, the parties updated the Court noting that a meeting was to be held with the expert and requesting the matter be adjourned to a Duty Judge list in mid-December 2021. The meeting with the expert was subsequently scheduled for 17 December 2021 and the parties requested a further adjournment to mid-February 2022.
[32] In a memorandum dated 22 February 2022, counsel for Mr Brown acknowledged that Ms Sweeney wishes to bid at the auction and that to enable her to do so she requires the expert report to be finalised so that she can identify the funds she will have available. Mr Brown agreed to a two-week adjournment and noted that if at the next mention Ms Sweeney was still refusing to sign the listing agreement the plaintiffs would seek orders that 28A Sefton be placed on the market and that Ms Sweeney give vacant possession.
[33] In a memorandum, also dated 22 February 2022, counsel for Ms Sweeney stated, among other things, that:
There is only one remaining property to be sold. That is the property jointly owned by the first plaintiff and the defendant, which has been the defendant’s home of 20 years. She had agreed to sale of the property on the basis she would bid at the auction. As pleaded in her statement of defence, filed in June 2021, she has consistently required the expert report to be finalised so that she can identify the funds she will have available to acquire the first plaintiff’s share in the property.
The first plaintiff proposed that the property be placed on the market but without the finalised expert’s agreement, the defendant is not in any position to bid at auction to purchase the property and will not therefore sign the listing agreement at this time. …
…
In addition to the three outstanding issues referred to in paragraph 5 of the memorandum filed on behalf of the plaintiffs, a further outstanding issue has arisen for the defendant as a result of losses arising from advice received between 2004 and 2014, and including the fresh issue that has now arisen as a result of penalty interest that has been charged by the second plaintiff as mortgagee on the sale of the property at 11 Bay Heights Drive in the Far North. The settlement statement prepared on behalf of the second plaintiff included a charge of disputed penalty interest. The settlement statement was prepared on behalf of the second plaintiff by the defendant’s former solicitor who also acted for the plaintiffs between 2004 and 2014. This will require a further amendment to the current pleadings.
[34] An updated expert report was provided on 9 March 2022, with further changes provided on 31 March 2022.
[35] On 7 April 2022 Mr Brown’s counsel wrote to Ms Sweeney’s counsel requesting Ms Sweeney’s consent to payment of the expert’s invoice and an interim distribution of the funds from the sale of the other properties. In relation to the sale of 28A Sefton, the letter states, among other things, that:
10.Your client now knows what she will be receiving from the earlier sales. Accordingly, there is no reason whatsoever that 28A Sefton [Ave] should [not] be placed on the market and sold as soon as possible. The view is that the market is turning. Any delay in placing this property on the market is likely to cause loss. Accordingly, please confirm as a matter of urgency that your client will sign the listing document so as to allow the auction to be schedule[d] forthwith. The agents are ready to go in this regard.
11.Unless the sale documents are signed by 1pm on Monday, 11 April my clients will have no option but to apply for urgent injunctive relief.
…
[36] On 11 April 2022 Ms Sweeney made an open offer to Mr Brown to purchase 28A Sefton for $1,175,000. The offer was rejected by letter dated 12 April 2022 and Mr Brown insisted 28A Sefton be put on the market and suggested a reserve of
$1,595,000. Counsel for Mr Brown reiterated the concern with the changing housing market and repeated the intention to seek urgent relief if Ms Sweeney did not cooperate.
[37] By letter dated 12 April 2022 Ms Sweeney confirmed she had obtained a valuation of 28A Sefton from a registered valuer. If accepted, there would be no sales
and marketing costs. The balance of the funds could be distributed to each of the parties (consistent with Mr Grove’s letter of 7 April 2022). If rejected, Ms Sweeney would apply to the Court for an order requiring Mr Brown to sell his share of 28A Sefton to Ms Sweeney.
[38] On 19 April 2022, Mr Brown filed an application for summary judgment seeking sale of 28A Sefton and an interim distribution of the proceeds from the sale of the other properties. In support of his application, Mr Brown has filed:
(a)affidavit of Mr Brown dated 20 April 2022; and
(b)reply affidavit of Mr Brown dated 18 May 2022.
[39] On 6 May 2022, Ms Sweeney filed a notice of opposition to the application for summary judgment. In support of her opposition, Mr Sweeney has filed:
(a)affidavit of Mr Robert Yarnton dated 3 May 2022, which exhibits a valuation for 28A Sefton assessing the market value (including chattels) at $1,250,000;
(b)affidavit of Ms Sweeney dated 6 May 2022; and
(c)affidavit of Mr Nicholas Bell-Booth dated 9 May 2022.
[40]The Court received a letter from the expert dated 31 May 2022 indicating that:
(a)he had received further information from Ms Sweeney since finalising his report;
(b)he had not taken any action in respect of the new information provided, however, his initial view is that the information is likely to change his conclusions (although the scale or effect of such changes is not yet known); and
(c)he requires further directions from the Court, including:
(i)whether he is required to review the additional material and provide a further report; and
(ii)as to the expert’s further costs.
Summary judgment
[41] Part 12 of the High Court Rules 20165 deals with summary judgment. Under r 12.2, I may give judgment against Ms Sweeney if Mr Brown satisfies me that Ms Sweeney has no defence to his claims.
[42] The following authoritative statement of the principles applying to summary judgment applications comes from the Court of Appeal in Krukziener v Hanover Finance Ltd:6
… [summary judgment] principles are well settled. The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried. The court must be left without any real doubt or uncertainty. The onus is on the plaintiff, but where its evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated. The court will not normally resolve material conflicts of evidence or assess the credibility of deponents. But it need not accept uncritically evidence that is inherently lacking in credibility, as, for example, where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent, or is inherently improbable. In the end the court’s assessment of the evidence is a matter of judgment. The court may take a robust and realistic approach where the facts warrant it.
(citations omitted)
[43] Counsel for Ms Sweeney says that Mr Brown has not obtained leave to file an application for summary judgment. I grant leave to Mr Brown to file an application for summary judgment at this stage in the proceeding. Filing an application for summary judgment would not have been necessary if the matter proceeded to trial in
5 Part 12 of the High Court Rules 2016 is rr 12.1–12.16.
6 Krukziener v Hanover Finance Limited [2008] NZCA 187, [2010] NZAR 307 at [26].
August 2021 and Mr Brown had been made aware at that time that Ms Sweeney did not agree to sale by auction. In these circumstances, leave should be granted.
Property Law Act 2007
[44] This is a claim under s 339(1) of the Act, pursuant to which the Court may make orders for the sale of property, as follows:
339 Court may order division of property
(1)A court may make, in respect of property owned by co-owners, an order—
(a)for the sale of the property and the division of the proceeds among the co-owners; or
(b)for the division of the property in kind among the co-owners; or
(c)requiring 1 or more co-owners to purchase the share in the property of 1 or more other co-owners at a fair and reasonable price.
(2)An order under subsection (1) (and any related order under subsection (4)) may be made—
(a)despite anything to the contrary in the Land Transfer Act 2017; but
(b)only if it does not contravene section 340(1); and
(c)only on an application made and served in the manner required by or under section 341; and
(d)only after having regard to the matters specified in section 342.
(3)Before determining whether to make an order under this section, the court may order the property to be valued and may direct how the cost of the valuation is to be borne.
(4)A court making an order under subsection (1) may, in addition, make a further order specified in section 343.
(5)Unless the court orders otherwise, every co-owner of the property (whether a party to the proceeding or not) is bound by an order under subsection (1) (and by any related order under subsection (4)).
(6)An order under subsection (1)(b) (and any related order under subsection (4)) may be registered as an instrument under—
(a)the Land Transfer Act 2017; or
(b)the Deeds Registration Act 1908; or
(c)the Crown Minerals Act 1991.
[45] Mr Brown is entitled to bring the application under s 341(1) of the Act. Making an order would not contravene s 340(1).
[46] Section 342 of the Act sets out relevant considerations which the Court must have regard to when deciding whether to make an order under s 339(1). They are:7
(a)the extent of the share in the property of any co-owner by whom, or in respect of whose estate or interest, the application for the order is made:
(b)the nature and location of the property:
(c)the number of other co-owners and the extent of their shares:
(d)the hardship that would be caused to the applicant by the refusal of the order, in comparison with the hardship that would be caused to any other person by the making of the order:
(e)the value of any contribution made by any co-owner to the cost of improvements to, or the maintenance of, the property:
7 Property Law Act 2007, s 324.
(f)any other matters the court considers relevant.
[47] Section 343 of the Act grants the Court further powers to make orders in addition to an order under s 339(1). Mr Brown seeks ancillary orders under s 343 that:
(a)Ms Sweeney immediately vacate 28A Sefton;
(b)If Ms Sweeney fails to sign documentation to enable the sale, the Registrar of the High Court be directed to sign; and
(c)There be an interim distribution of funds.
[48] I now consider whether Ms Sweeney has any defence to Mr Brown’s claim to sell 28A Sefton by auction and make an interim distribution.
Was there an agreement that 28A Sefton be sold by public auction?
Matters the court considers relevant – s 342(f)
[49] Mr Brown is relying on an agreement to sell by auction. I will deal with this first as it may determine the issue.
[50] Counsel for Mr Brown says that the consent orders recorded in the minute of Associate Judge Gardiner dated 26 May 2021 require sale of 28A Sefton by auction. Those consent orders state, among other things, that:8
Issues
[3]The parties agree that the issues for determination at trial will be:
(a)the timing of the sale of 28A Sefton [Avenue] (noting all parties are agreed that the property is to be sold by auction);
(b)determining the formula pursuant to which the sale proceeds from the six properties will be distributed;
(c)a claim by the plaintiffs in relation to rent received (or not received) in relation to 28A and 26B Sefton Avenue (although there is no dispute that the first plaintiff is entitled to rent for
8 Brown v Sweeney HC Auckland CIV-2018-404-2663, 26 May 2021 (Minute of Associate Judge Gardiner).
26B Sefton Avenue pursuant to a Property Sharing Agreement dated 26 March 2003).
Orders / directions
[4]By consent, I order / direct:
Sale of properties
(a)The following four properties will be placed on the market and sold as promptly as possible, with no reserves, and by way of public auctions:
(i)26B Sefton Avenue;
(ii)52 Carrington Drive;
(iii)11 Bay Heights Drive;
(iv)68 Bay Heights Drive.
(b)the conveyancing is to be undertaken by Linda Fox of Carson Fox Legal;
(c)the sale proceeds, after costs of sale, are to be held in the trust account of Carson Fox Legal pending agreement between the parties or Court order, but allowing for the funds to be used to pay the Court appointed expert, Matthew Kemp.
[51] While the above minute notes the agreement that all properties are to be sold by auction, it does not order the sale of 28A Sefton. There are currently no orders requiring the sale of 28A Sefton by auction. The issue, however, is whether Ms Sweeney has a defence to the claim that there is an enforceable agreement that 28A Sefton be sold by auction. If there is an agreement, then Mr Brown is entitled to have it enforced. The minute referred to above is relevant to what had been agreed as at 26 May 2021.
[52] Counsel for Ms Sweeney says that Ms Sweeney never agreed to sell 28A Sefton by way of public auction and if she did, she required that Mr Brown not bid.
[53]The correspondence, memoranda and minutes of the Court demonstrate that:
(a)On 19 March 2021, Ms Sweeney’s counsel confirmed in writing that “the five remaining properties would be sold by auction”. This includes 28A Sefton.
(b)On 14 April 2021, a memorandum filed for Ms Sweeney states that she “agrees to orders being made that: … 28A Sefton Ave is sold by auction by Barfoot & Thompson who will undertake the marketing of that property”.
(c)On 7 May 2021, a further memorandum for Ms Sweeney says that she proposes orders that 28A Sefton is sold by auction.
(d)On 26 May 2021, the Associate Judge Gardiner’s minute notes the issues for determination at trial and records: “the timing of the sale of 28A Sefton [Avenue] (noting all parties are agreed that the property is to be sold by auction)”.
(e)On 18 June 2021, the statement of defence and counterclaim says that Ms Sweeney agreed to sale of 28A Sefton by auction by Barfoot & Thompson.
[54] The above documents, on their plain meaning, show that Ms Sweeney had agreed to a sale by auction for 28A Sefton.
[55] Counsel for Ms Sweeney acknowledges that Associate Judge Gardiner’s minute of 26 May 2021 records that all properties were to be sold by way of auction but says that some of the other properties were sold by private treaty. That may be correct, but that does not change the agreement for 28A Sefton. Unless Mr Brown agrees to a sale by private treaty, the circumstances surrounding the sale of the other properties are irrelevant to what has been agreed for 28A Sefton.
[56] Ms Sweeney also says that the parameters of the agreement are not clear and while certain matters have been agreed it cannot be said that such agreement was contractual in nature. It is my view that some of the matters that were clearly agreed
are contractual in nature. Those matters have been communicated to the Court as being agreed, the trial date was vacated because of them and issues in dispute have been narrowed as a result. It would cause prejudice and potential hardship to Mr Brown if Ms Sweeney is now able to resile from them.
[57] The documentation shows that while not all aspects were agreed, the following terms were agreed:
(a)28A Sefton would be sold by auction;
(b)Barfoot & Thompson would market the sale of 28A Sefton; and
(c)28A Sefton would be sold after the sale of the other four properties (the other four also being sold by auction).
[58] What is less clear is whether it was a condition of the above agreement that Mr Brown not bid at auction or whether this was an additional term proposed by Ms Sweeney.
[59] Ms Sweeney maintained in correspondence up to August 2021 that she did not want the plaintiffs (or anyone associated with them) to bid at the auction. Mr Brown has been equally consistent in reserving his position to bid – although he did note in his 4 August 2021 letter that he did not intend to bid.
[60] This issue was the subject of correspondence immediately prior to the scheduled trial. The parties then each filed memorandum on 9 and 11 August 2021 identifying the issues remaining.
[61] Ms Sweeney’s memorandum of 11 August 2021 referred to the 26 May 2021 minute which identified the timing of the sale of 28A Sefton as an outstanding issue and noted that all parties are agreed that the property is to be sold at auction. Ms Sweeney did not identify who could bid as an outstanding issue. The outstanding issues were focused on the timing of the sale, the expert report and claims for rent. This supports the view that the issue of who could bid was not a condition but rather a term that Ms Sweeney wanted but was never agreed.
[62] Ms Sweeney also says that she could not agree to an auction until the expert’s report was finalised. The correspondence, however, indicates that the purpose of waiting for the expert report was to enable Ms Sweeney to know how much she could bid, rather than to determine whether the sale was by auction. This is apparent from the following correspondence:
(a)Letter from Ms Sweeney’s counsel dated 19 March 2021:
The timing of the auction for 28A was expressly discussed at the JSC and it was agreed that auction would take place after the sale of the other properties and when Ms Sweeney had a clear understanding of her overall financial position and whether she could realistically bid to purchase 28A.
(emphasis added)
(b)Memorandum of counsel for Ms Sweeney dated 22 February 2022:
There is only one remaining property to be sold. That is the property jointly owned by the first plaintiff and the defendant, which has been the defendant’s home of 20 years. She had agreed to sale of the property on the basis she would bid at the auction. As pleaded in her amended statement of defence, filed in June 2021, she consistently required the expert report to be finalised so that she can identify the funds she will have available to acquire the first plaintiff ’s share in the property.
(emphasis added)
[63] Counsel for Ms Sweeney says that Ms Sweeney has consistently maintained that she wishes to buy Mr Brown’s share in 28A Sefton. I accept that this is true but this does not mean that Ms Sweeney did not agree to buy Mr Brown’s share by bidding at auction.
[64] Counsel for Ms Sweeney also argues that there is no final settlement agreement to sell 28A Sefton by auction. While there is no settlement agreement, there is correspondence, memoranda and Court minutes which record what was agreed. It is not necessary that an agreement be captured in a settlement agreement to be binding. If Ms Stevenson did not agree to a sale by auction and instead wanted the option to purchase directly from Mr Brown, this issue should have been identified so that it could have been resolved at the trial scheduled for August 2021. The fact that it was not, supports the conclusion that Ms Sweeney had agreed to the auction. The actions
of the parties show that they both proceeded on this basis and it was not until 2022 that Ms Sweeney proposed the alternative of Mr Brown being required to sell his share to Ms Sweeney.
[65] In terms of the conditions of the auction, during the hearing, counsel for Mr Brown indicated that Mr Brown was now happy for there to be no reserve at the auction. This is in Ms Sweeney’s interests given she has limited money available to bid.
[66] For the reasons above, I am satisfied the parties agreed to sell 28A Sefton by auction and that Barfoot & Thompson would undertake the sale. Ms Sweeney does not have an arguable defence to that claim. I will also order that there is no reserve price, as offered by Mr Brown, as this is in Ms Sweeney’s interests given she wishes to purchase the property.
[67]I now turn to the other factors I must consider under s 342 of the Act.
Relevant factors – s 342
Section 342(a): The extent of the share in the property of any co-owner
[68] Mr Brown and Ms Sweeney each hold an equal interest (50:50) as tenants in common. This factor is relevant to the issue of whether Mr Brown should be able to bid. Given the parties are equal owners, they should have equal opportunity to purchase 28A Sefton. While it is acknowledged this is Ms Sweeney’s home, Mr Brown also has a financial interest in the property and third parties are able to bid. Mr Brown should be given the same opportunity as third parties.
Section 342(b): The nature and location of the property
[69] The property is in Grey Lynn, Auckland. It is Ms Sweeney’s home and she has lived there for 20 years. I consider this factor below in relation to hardship to Ms Sweeney. Given Ms Sweeney has agreed to a sale by auction and Mr Brown is entitled to receive fair value for his share, the fact that it is Ms Sweeney’s home does
not justify resiling from the agreement or requiring Mr Brown to buy Ms Sweeney’s share based on a valuation advanced by Ms Sweeney.
Section 342(c): The number of other co-owners and extent of their shares
[70]This factor has been considered at paragraph [68] above.
Hardship – s 342(d)
[71] The assessment of hardship is a comparative exercise. In Kid Country Te Atatu Ltd v Hoy, Downs J commented that:9
Hardship in this context has been described “as a value laden criterion”, and as requiring assessment “in the round”. I consider the statute intends the term be used in its usual sense, with one refinement: the statutory concern is comparative hardship. The Court must consider the hardship that would be caused to the applicant if an order were not made, “in comparison with” the hardship that would be caused “to any other person” if an order were made. The latter obviously encompasses those opposing the order, but is potentially broader.
(emphasis original and footnotes omitted)
[72] If I refuse to make an order for sale of the property by auction, I will be allowing Ms Sweeney to resile from the agreement reached in 2021. This will cause hardship to Mr Brown as it may result in him receiving less money than he may receive if there is a sale by auction. While Ms Sweeney relies on a valuation in May 2022 of
$1,250,000, Mr Brown relies on a market appraisal in April 2022 which estimates that 28A Sefton is likely to sell for between $1,595,000 and $1,765,000. There is clearly a difference between the two.
[73] Neither of the proposed values for 28A Sefton have been tested. A sale by auction will determine what the market is willing to pay. Given Mr Brown and Ms Sweeney hold equal interests, this will cause less hardship than the option of forcing Mr Brown to purchase Ms Sweeney’s share at the value proposed by Ms Sweeney.
9 Kid Country Te Atatu Ltd v Hoy [2019] NZHC 988 at [25]. See also Phillipps v Phillipps [2019] NZHC 15 at [18]–[19] where Edwards J’s analysis involved weighing the hardship to the defendant against that to the plaintiffs if the property was sold; and Holster v Grafton (2008) 9 NZCPR 314 (HC) at [50] where Fogarty J described “hardship” as a value laden criterion which “suggests an adverse effect which is of significant impact”.
[74] Further, Mr Brown agreed to delay the sale of 28A Sefton for the expert report to be completed so that Ms Sweeney would know whether she can afford to bid at auction. It is unlikely Mr Brown would have agreed to vacate the hearing in August 2021, if he knew Ms Sweeney was not willing to go to auction. The time it has taken to complete the expert report has coincided with changes in the property market which may mean that Mr Brown’s share is worth less than it would have been if 28A Sefton was sold in 2021.
[75] Against the above, Ms Sweeney has lived at 28A Sefton for 20 years and it is her home. She has been consistent in her desire to remain living there. She says Mr Brown has no interest in the property but has reserved his right to bid at auction. She says this causes her hardship.
[76] It is unfortunate that Ms Sweeney may have to find a new home if her bid is unsuccessful, but this has been a risk of sale by auction from the start. This risk was present in May 2021 when Ms Sweeney agreed to it. This risk may have been greater in 2021 than 2022 given the changing property market. On its own, it does not justify denying Mr Brown the opportunity to see what the market is willing to pay and the possibility of achieving a higher value.
[77] Ms Sweeney will receive her share of the proceeds of sale for 28A Sefton if she is unsuccessful at the auction, so will not suffer financial hardship.
[78] Counsel for Ms Sweeney says that it is open to the Court to make an order that Mr Brown be directed to purchase Ms Sweeney’s share of 28A Sefton based on the valuation. Ms Sweeney has not filed any counterclaim requesting such an order under s 339(1)(c), however, counsel for Ms Sweeney argued that the Court may make this order if appropriate without an application.
[79] I do not consider such an order is appropriate given the agreement to sell at auction. Further, the valuation evidence has not been tested and if such an order was sought by Ms Sweeney, this could have been pleaded in her counterclaim and the matter determined at the trial set down for August 2021. It was not and 28A Sefton has still not been sold.
[80] Ms Sweeney also says, given the current market conditions, a sale by auction may result in the property being passed in, which will result in further uncertainty and delay for both parties. The Court cannot predetermine the outcome of the auction and this is not a reason to ignore the terms of the agreement. As Ms Sweeney indicates, she wishes to buy the property. Counsel for Mr Brown has also indicted that Mr Brown is happy to have no reserve at auction. In circumstances where Ms Sweeney can bid and there is no reserve price, it is likely 28A Sefton will sell at auction.
[81] Counsel for Ms Sweeney also says that the plaintiffs have not acted in good faith and relies on:
(a)A lack of clarity as to the basis on which properties were purchased when the parties used the same solicitor (2001 to 2007) for the purchase of the other properties.
(b)Recovery of penalty interest when the mortgage in relation to 11 Bay Heights Drive was discharged.
(c)Mr Brown taking steps to list the property.
(d)Requesting an undertaking from Ms Sweeney to cooperate in enabling the sale of 28A Sefton.
(e)Requiring a sale by auction that will result in additional costs that will not be incurred if Mr Brown sells his share directly to Ms Sweeney.
[82]I consider each of the above.
[83] I do not accept that “lack of clarity” amounts to bad faith on the part of Mr Brown. It was for both parties to be clear on the terms on which the properties were purchased. Further, if Ms Sweeney has concerns with the same solicitor acting for both parties at the same time, that is a matter to be taken up with the solicitor and is not a reason for inferring a lack of good faith by Mr Brown.
[84] Enforcement of a contractual right to penalty interest is not “bad faith”. In any event, Mr Brown has offered to resolve this issue by waiving half of that penalty interest. That offer has not been accepted. I do not accept that this issue is relevant to determining whether 28A Sefton should be sold by auction.
[85] Counsel for Mr Brown, wrote to Ms Sweeney’s counsel to request her confirmation to proceed with the auction, to provide an undertaking to cooperate and to sign the listing agreement. I do not accept that this is bad faith in circumstances where Ms Sweeney had agreed there would be a sale by auction. This was done in November 2021, some months after the expert had prepared his first draft of the report.
[86] While an auction will incur additional costs compared to a sale directly between Ms Sweeney and Mr Brown, it may also result in an increased price being achieved. Mr Brown is entitled to receive the best market price available. Again, this does not amount to bad faith.
[87] I therefore consider that the hardship to Mr Brown of not granting the order for a sale by auction outweighs the hardship to Ms Sweeney. It would require the agreement reached in 2021 to be set aside without a reasonable basis for doing so.
Section 342(e): The value of any contribution made by any co-owner to the cost of improvements to, or the maintenance of, the property
[88] This is a significant factor when determining whether to order an interim distribution. For the sale by auction, this factor is neutral as the form of sale will not deprive a party of their contribution to improvements and maintenance.
[89] Having considered all of the s 342 factors, Ms Sweeney does not have a defence to the claim for sale of 28A Sefton by auction. This is what has been agreed for over 12 months and it should now be given effect.
Should Ms Sweeney be required to vacate 28A Sefton and sign documentation?
[90] Mr Brown seeks additional orders requiring Ms Sweeney to vacate 28A Sefton and sign all documentation necessary to enable a sale by auction.
[91] The Court may make such further orders as are necessary or desirable as a consequence of ordering the sale of a property.10 As with an order under s 339(1), in making additional orders, I must have regard to the factors set out in s 342.
[92] I refer to my consideration of each of the s 342 factors above. Those considerations also apply to whether Ms Sweeney should vacate the premises but with the following as additional relevant considerations.
[93] Presentation and marketing of the property is likely to influence the potential market price. If Ms Sweeney cooperates (as it is in her interests to do if she is to obtain the highest possible value for her share), there would be no need to force her to vacate 28A Sefton. Against that, Ms Sweeney wishes to remain at the property, so she has an interest in 28A Sefton not being attractive to potential purchasers. Mr Brown however, has reserved the right to bid, meaning Ms Sweeney risks Mr Brown bidding a higher price if Ms Sweeney does not allow the property to be marketed to its full potential.
[94] I accept that if Ms Sweeney is required to vacate before the auction, this is likely to cause hardship to Ms Sweeney as she may be successful in her bid, meaning she would be moving out unnecessarily. There is also no reason a sale by auction cannot occur while Ms Sweeney remains at 28A Sefton.
[95] Given the potential unnecessary hardship to Ms Sweeney, she should not be required to vacate 28A Sefton so it can be marketed and sold. That would likely lead to further unnecessary delays and would not be necessary if Ms Sweeney is successful.
[96] Mr Brown also requests orders directing the Registrar of the High Court to sign documentation if Ms Sweeney refuses to sign. Mr Brown says that Ms Sweeney has refused to sign the listing agreement. Mr Brown relies on r 11.22 of the High Court Rules11 and Sharma v Wati12 in requesting such orders.
[97] I accept that Ms Sweeney has not signed the documents because she was awaiting the final expert report to determine how much she could bid. While this
10 Property Law Act 2007, s 343(g).
11 High Court Rules 2016.
12 Sharma v Wati [2021] NZHC 1444.
explains the delay to date, now that Ms Sweeney has agreed to an interim distribution and knows the amount she has available to bid, there is no basis to continue to refuse to sign.
[98] I accept that there has been some delay in the sale. Ms Sweeney has also changed her position from agreeing to sell by auction to now requesting that Mr Brown sell his share to her without a sale by auction. The preparation of the expert report has also taken some time and Ms Sweeney has provided further information to the expert after he provided his report on 31 March 2022. Given the delays, I do consider that it is appropriate that orders are made directing the Registrar to sign documentation if Ms Sweeney refuses to do so.
Should there be an interim distribution of funds held in trust?
[99] Both parties agree there should be an interim distribution of the funds. Ms Sweeney agrees to a distribution of $625,000 to each of her and Mr Brown ($1,250,000 in total). This will enable Ms Sweeney to bid at auction.
[100] Mr Brown says all the funds held on trust should be distributed in accordance with the expert’s report but with the following adjustments:
(a)A credit for Ms Sweeney of $40,000 for the repayment of the mortgage for 11 Bay Heights Drive; and
(b)Adjustment for the costs award (costs of $4,182.50 and disbursements of $110) of Lang J dated 9 July 2021 directing that the costs be paid from the sale proceeds of the first property sold. This is not disputed by Ms Sweeney.
[101] I cannot see that there is any basis to dispute [100](a) above as this reflects the fact that Ms Sweeney contributed $40,000 to the purchase (which she borrowed and secured by mortgage). This adjustment should be made to any final distribution.
[102] Ms Sweeney says that she disputes the penalty interest that has been paid for the discharge of the mortgage for 11 Bay Heights Drive. She says that issue may
impact the final expert report. I note that the penalty interest was paid when the mortgage was discharged. The funds paid by way of penalty interest would need to be recovered from the mortgagee and included in the funds to be distributed. They do not currently form part of the funds for distribution, so this issue is not relevant to the interim distribution.
[103] Ms Sweeney also says the expert report is not final and has not been considered by the Court so that, other than what has been agreed, not all the funds should be distributed.
[104] The expert has also written to the Court on 31 May 2022 indicating that he had received further information and his initial view was that the information is likely to change his conclusions (although the scale or effect of such changes is not yet known). This is relevant when considering whether Ms Sweeney has any defence to the proposed distribution and whether I should order an interim distribution on a summary judgment basis. If I order the distribution of all the funds this may result in distribution of funds that is inconsistent with any changes the expert may make to his report in light of the additional information received.
[105] Given the letter from the expert indicating that the conclusions may change, I am unable to determine on a summary basis whether Ms Sweeney has an arguable defence to the distribution of the remainder of the funds. In these circumstances, I will allow an interim distribution based on what has been agreed, that being:
(a)$625,000 to each of the parties; and
(b)distribution to Mr Brown to cover the costs ordered by Lang J on 9 July 2021.13
[106] The factors set out in s 342 of the Act are also relevant when considering whether to make an order as to distribution. In addition to the discussion above regarding each of these factors, I note that the value of contributions made by each party to improvements and maintenance is relevant. Given the letter from the expert,
13 Brown v Sweeney HC Auckland CIV-2018-404-2663, 9 July 2021 (Minute of Lang J).
the value of these contributions may change given the new information that has been provided. In these circumstances, there may be hardship if I order a distribution that is not agreed without first determining whether further information and time is necessary to finalise the expert report.
[107] It has been many months since the expert prepared his first draft of the report in August 2021. To enable the remainder of the funds to be distributed without any further delay, I will direct the parties to each file a memorandum setting out their response to the letter from the expert dated 31 May 2022. Determination of the next steps to enable the expert report to be finalised can be dealt with on the papers.
Result
[108] For the reasons set out above, the application for summary judgment is granted in relation to sale of 28A Sefton by auction. I make the following orders:
Sale of 28A Sefton by auction
(a)28A Sefton Ave, Grey Lynn, Auckland is to be sold by public auction to be undertaken by Barfoot & Thompson;
(b)There is to be no reserve price at auction;
(c)If within two clear working days of being provided with a Barfoot & Thompson listing agreement for the sale by auction of 28A Sefton, Ms Sweeney fails or refuses to sign the listing agreement, the Registrar of the High Court at Auckland is appointed to sign the listing agreement for, and on behalf of Ms Sweeney, in respect of the sale by auction of 28A Sefton;
(d)If within 24 hours of being presented with a sale and purchase agreement from the highest bidder, Ms Sweeney fails to sign the agreement, the Registrar of the High Court at Auckland is appointed to sign the sale and purchase agreement;
(e)If within three clear working days of being provided with any authority and instruction form (“A & I”) required of Ms Sweeney to convey title in the event of the sale of 28A Sefton, Ms Sweeney fails or refuses to sign such form the Registrar of the High Court at Auckland is appointed to sign the A & I form for, and on behalf of, Ms Sweeney in respect of the sale of 28A Sefton;
(f)That all costs of the sale of 28A Sefton are to be shared equally between Mr Brown and Ms Sweeney;
(g)The conveyancing for the sale of 28A Sefton is to be undertaken by Linda Fox of Carson Fox Legal; and
(h)Leave is granted for either party to apply to the Court on 48 hours’ notice for any resolution of a dispute in relation to the above orders.
Interim distribution
(i)That there be an interim distribution of the funds held in trust by Carson Fox Lawyers as follows:
(i)$625,000 to each of Mr Brown and Ms Sweeney;
(ii)Costs of $4,182.50 and disbursements of $110 to be paid to Mr Brown in accordance with the orders of Lang J dated 9 July 2021; and
Expert report
(j)The parties to file a joint memorandum within five working days of these orders in response to the letter from the expert dated 31 May 2021 and in particular addressing the following:
(i)Whether the expert should be required to consider the further material provided to the expert since his report dated 31 March 2022;
(ii) The deadline by which any further information is to be provided
to the expert;
(iii)
The date by which a final expert report is to be provided to the Court; and
(iv)
Payment of the costs of the expert.
Costs
(k)
The
plaintiffs are entitled to costs on a 2B basis together with
disbursements as fixed by the Registrar.
Tahana J
3
1